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abrdn plc (LON:ABDN) has released its half-year results for 2024, demonstrating significant progress in profitability and cost management. The company's strategic focus on transforming its cost base and enhancing performance in its core businesses has begun to yield positive results.
Group Profitability and Revenue
Group profitability has been bolstered by effective cost transformation. Net operating revenue for the first half of 2024 decreased by 7% to £667 million, compared to £721 million in H1 2023. This decline reflects the impact of outflows and anticipated lower margins in Investments, as well as the net effect of corporate actions. However, the reduction was partially offset by an increase in Adviser revenue.
Cost Reduction Efforts
The company has made substantial progress in reducing its operating expenses. Adjusted operating expenses decreased by 9% to £539 million, down from £594 million in H1 2023. This reduction is attributed to successful cost-saving measures, including an 11% decrease in staff costs (excluding variable compensation) and a 9% reduction in non-staff costs.
Profitability and Earnings Per Share
Despite the revenue decline, adjusted operating profit increased by 1% to £128 million, up from £127 million in H1 2023. The IFRS profit before tax saw a substantial improvement, rising to £187 million from a loss of £169 million in H1 2023. This increase includes an £88 million gain from the sale of the European-headquartered Private Equity business and lower losses of £(15) million from the reduction in the value of listed stakes held on the balance sheet.
Adjusted diluted earnings per share (EPS) also saw an improvement, rising to 6.8p from 6.2p in H1 2023. This increase was driven by higher adjusted profit after tax and the benefits from share buybacks in 2023.
Assets Under Management and Administration (AUMA)
AUMA increased by 2% to £505.9 billion, compared to £494.9 billion at the end of FY 2023. This growth was driven by positive market movements and inflows.
Investments Division
The performance transformation in the Investments division is ongoing. While the division faced challenges with outflows and lower margins, efforts to enhance investment performance are underway, showing early signs of success.
Adviser Division
The Adviser division reported strong earnings, with actions being taken to address outflows. The division is also seeking to improve its competitive position through strategic repricing initiatives.
Interactive Investor
Increased investment in interactive investor is supporting organic growth. The platform continues to innovate, aiming to reach a growing number of customers in the UK savings and wealth market.
Outlook and Future Initiatives
Each of abrdn’s three core businesses has made progress against their strategic objectives in the first half of 2024. The company remains focused on returning to profitable and sustainable growth, although the outlook for global financial markets remains uncertain.
To navigate this uncertain environment, abrdn is taking steps to improve investment performance, modernise its platforms, and restore profitability by transforming its cost base. The company is investing in areas with clear growth opportunities, particularly in investment specialisms where it has strength and scale.
In the structurally attractive UK savings and wealth market, the Adviser division aims to enhance its competitive position through strategic repricing, while interactive investor continues to innovate and expand its customer base.
abrdn is on track to improve efficiency through its cost transformation programme, targeting operating costs below £1,075 million for 2024. The company also aims to achieve at least £150 million in annualised cost savings by the end of 2025 compared to 2023.
